The 5 major cutaneous defects of development found in focal dermal hypoplasia, an ectomesodermal dysplasia syndrome, are: aplasia cutis congenita, multiform atrophy-like areas, striate, papillomatous, and lipomatous lesions of skin. Subepidermal lipomatosis, present in some lesions, has been reported to be due to absence of dermis or a striking underdevelopment of connective tissue with replacement by adipose tissue from herniation of subcutaneous fat through multiple areas of hypoplasia. We believe this theory to be a major error in interpretation of the microscopic findings. We have had the unique experience of studying 2 patients periodically for 27-30 years and 2 additional patients for a shorter time. Biopsy specimens were removed at intervals for analysis from the same or similar lesions (43 specimens) from these 4 individuals. Our evidence strongly supports the concept that the cutaneous defects of development involving fat cells represent heterotopic fat i.e. a fat nevus resulting from dysplasia, not hypoplasia followed by herniation of subcutaneous fat.